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California warns investors about crypto savings platforms like Celsius and Voyager

 


The California Department of Financial Protection and Innovation (DFPI) warns investors to be “extremely cautious” when dealing with savings platforms that promise interest income on crypto assets.


According to the California Investor Protection Agency, it is currently investigating several crypto savings platforms on suspicion of "violating applicable law under the supervision of the department".


In a related warning , DFPI wrote Tuesday that crypto savings platforms “are not subject to the same investor protection regulations as banks and credit institutions.” This is compounded by the fact that several platforms "currently do not allow their customers to withdraw money or move to other accounts". The authority adds:


"The Department warns California consumers and investors that many crypto savings platforms may not have adequately disclosed to their customers the risks they are taking by investing their crypto assets on the platforms."

"Consumers are therefore urged to exercise extreme caution when being offered any such investment or financial service," the DFPI said.


Celsius and Voyager are negative examples

The Office for Investor Protection adds that, in its opinion, some of the crypto savings platforms are also guilty of the illegal sale of securities, and in this context refers to two current cease and desist orders against the crypto companies BlockFi and Voyager Digital.


The California regulator's warning comes at an interesting time, as the two influential crypto savings platforms Celsius Network and Voyager Digital are at risk of insolvency and have imposed "temporary" payout freezes as a result.


While there are rescue plans in place and hard work behind the scenes to keep the business running, it remains unclear if and how investors in the platforms will get their funds back. The associated loss of trust could possibly even mean the end of centralized crypto savings platforms , as crypto expert Cory Klippsten recently suspected.

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